21 May 2007
CER Set To Acquire VRM Group Of Companies
Statement made by David Warrick, Managing Director, CER Group Limited
* CER signs heads of agreement to acquire the VRM (Vital Resource Management) Group of Companies in Australia
* Brings market-leading company in rapidly growing industry into CER Group
* Expected to grow CER's profit by A$1m in Year One and be earnings per share positive
* Acquisition valued at A$4.8m
CER Group Ltd (CER) advises that it has signed a conditional heads of agreement to acquire Australian sustainable
environmental management company Vital Resource Management (VRM).
VRM is a privately-owned company based in Townsville, Queensland. It manufactures and markets pro-biotic
formulation-based products used in applications as diverse as water and soil treatment, sustainable farming, commercial
and domestic cleaning. Its products are sold across Australia and New Zealand, along with Europe and the Middle East.
"The acquisition of VRM should be seen as a clear statement of intent from the CER Group," said David Warrick, CER
Managing Director. "We have committed to acquisition as a key component of our growth strategy and we are delighted to
have identified a business of the quality of VRM that will both improve the Group's overall profitability while offering
the prospect of synergies with other of the Group's businesses.
"The acquisition of VRM will strengthen CER with a market-leading company in a rapidly-growing environmental industry.
We also believe there is potential for significantly enhancing that growth by leveraging the expertise within the CER
Group and the synergies offered by CER's other businesses," he said.
The timing of this acquisition also emphasises the immediate success of strengthening of the Board by the appointment of
Australian based Mr. Robin Levison, whereby one of his key non-executive roles is to both oversee and accelerate the
acquisition process for the CER Group.
Year one projected revenues from VRM following the completion of the acquisition are in excess of A$5m, producing a net
profit of A$1m per annum. VRM will continue to be led by the current successful management team.
The purchase price is expected to be approximately AU$4.8 million, including A$1.5m of net assets, the majority of which
will be paid for through a share issue to the vendors.
The deal is subject to due diligence, and any necessary shareholder consents. Key details of the proposed transaction
are as attached.
The announcement of the proposal to acquire VRM builds upon a string of recent successes for CER Group with its current
businesses.
Last week CER announced that its Certified Organics business has secured a NZ$500,000 contract with the South Australian
Government for the provision of its unique pine extract-based BioSeed Eradicator herbicide.
Earlier in May, it announced that sales at its New Zealand Nature business for the quarter ended 31 March 2007 have
grown more than 25 percent on the equivalent quarter in 2006.
The Group also declared its first annual operating profit earlier this year, for the December 2006 year.
ENDS